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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: H James Morris who wrote (106552)	7/26/2000 9:36:30 PM
From: Eric Wells	Read Replies (3) \| Respond to of 164684

The company said that its U.S. book, music and video divisions were all profitable in the quarter, posting just over $10 million in gross profits. I wonder how they calculate this. I assume they mean Pro Forma Operating Income. According to Amazon's press release, 63% of their gross profit is attributed to books, music and video: Books, Music, Video $ 86,862 63.84% International $ 16,286 11.97% Early Stage & Other $ 32,916 24.19% Total $136,064 Total operating expense used to calculate Pro Forma Operating Income comes out to $225,413: Marketing, Sales & Fulfillment $129,813 Technology & Content $ 67,132 General & Administrative $ 28,468 Total $225,413 To get a pro forma income number of $10 million for books, music & video, you have to assign only 34% of the above expenses to that category. Pro Forma Income Operating Expense Percentage Books, Music, Video $ 10,056 $ 76,806 34.07% International (34,503) $ 50,789 22.53% Early Stage & Other (64,902) $ 97,818 43.40% Is Amazon really only spending 34% of their marketing sales and fulfillment on books, music and video despite the fact that this category makes up 66% of their revenue? I would think, in fact, that since Amazon sells more books, music and videos than other products that marketing, sales & fulfillment costs, as well as G&A would be higher for this category. I would think the percentage breakout of expenses might fall roughly in line with the percentage breakouts of revenue. But 66% to 34% is a bit of a stretch. But what do I know. I suppose Amazon can break out the numbers any way they choose - and without explanation. I can hear Bezos in the pre-earnings staff meeting now: "We've got to be profitable somewhere - let's make books, music and video profitable - on a Pro Forma basis that is. We can adjust the expense percentages - let's shoot for say, $10 million." Disclaimer: to prevent myself from being sued - the above is not a real quote, but rather a hypothetical, fictitious statement that in now way can be attributed to Jeff Bezos or anyone at Amazon for that matter. -Eric